Buying a new car is not as easy as it sounds. Dealing with the overbearing, pushy car salesmen can be frustrating. This is one of the reasons why people tend to delay buying a new car and instead do whatever it takes to make the most out of their existing vehicle. But eventually there will come a time when they will need to get a new car, even more so when their existing vehicle just isn’t cutting it anymore.
Whichever car you’re planning to buy, these 10 important car buying tips will do wonders for you in getting the best deal possible.
1. Do Your Homework
The last thing you want to do is to arrive at a car lot and buy the very first car you come across. Not enough emphasis can be placed on the fact that you will need to do your homework regarding buying the best car for your needs and requirements.
You can find all the necessary information online about the car that you wish to buy. Also, while finding about prices, focus on the ‘invoice’ price rather than the MSRP. Basically, this is the price the dealer paid to the manufacturer of the car. Once you move to the price negotiations stage, this information will come in awfully handy.
2. Check Out Pre-financing Options
Most people get financing from the dealership, but this is not a good idea.
In most cases, dealerships charge higher interests than what you would get from credit unions and banks. While searching for car loan rates, you should start with your credit union or bank. By doing so you might score relationship discounts that will not be available elsewhere. Once you get a quote from the financial institution of your choosing, get it in writing. This way, you can show this quote to the dealership to get an even lower interest rate.
Since your credit score plays a vital role in car loan rates, make sure you know your credit score. The better your score, the lower the cost of your car is going to be.
3. Look Around
Before you buy, it is always a good idea to look around. Do not stick to one dealership, check out others too. By doing so, you will find the best possible price.
Prices vary due to the location of the dealership, for this reason visit out-of-town dealerships as they offer cheaper rates.
4. Negotiate Terms
Buying a car is just as complicated as a match of chess. Similar to buying a house, buying a new car is one of the most important investments you will make. In fact, it is so important you will be paying for the car for the next couple of years.
Seeing how important such a decision really is, let the car salesman know you will not be taken for a ride. Do everything in your power to negotiate the best terms for your car loan. You may even need to work towards getting the purchase price reduced. You can make this possible by starting with a lower number and slowly making your way backwards.
Chances are the car salesman dealing with you might offer a monthly payment for a certain amount on 5-year loan; tell them you want the same payment for a 4-year loan instead.
Remember, you need to be confident while visiting dealerships. If need be, practice your negotiation tactics and strategies beforehand.
5. Make a Decision Based on Purchase Price
Car dealers are known for offering seemingly attractive monthly payment options to potential buyers so don’t be fooled easily.
If the attractive monthly payment option being offered to you comes in the form of a 6-year loan, then you are being taken for a ride. For this reason, you always need to negotiate based on purchase price instead of monthly payments. Before you buy any car, make sure you know its full purchase price, which is why it is important to do your homework, as mentioned earlier.
The price being offered to you could include various hidden costs like car preparation, delivery fees, and various taxes. The dealership will not tell you about them unless you ask them.
6. Use the Internet
You do not strictly have to buy a new car from a dealership. You can look into buying one online as well.
The reason why you should consider buying a car online is because it eliminates the hassle of going around and dealing with annoying car salesmen. If that is not enough, you might also end up with a better price.
When you visit a dealership, the salesman there will try to sell a car to you at the highest price possible because their commissions depend on it. But when you buy online, you will not have to worry about that since the sales manager gets a fixed salary with bonuses based on the volume of cars sold.
If and when you do decide to buy a car online, make sure you test drive it and have it thoroughly checked by your mechanic to ensure there are no problems for you to worry about.
7. Buy a Car You Can Afford
If you are considering buying a new car while the existing one hasn’t even been fully paid off, then you need to reassess your financial situation. Do not buy another car if you can’t afford it.
You may be lured into buying a new car if you see a Land Rover Defender for sale or any of your favorite cars for that matter, but you need to spend wisely.
It would be wise to wait until the current car has been paid off. Once that is done, start saving the money you would pay in the form of monthly payments for your current car in an interest-bearing account for a year or so. By following this strategy, you will be able to save enough money to use as down payment for a new car.
8. Avoid Mentioning Your Trade-In
During the process of buying a new car, keep all your cards close to your chest. This means you can’t mention your trade-in. Until you are at the end of the purchasing process, do not mention it under any circumstances. The reasons being this information can be used against you.
For example, if you are looking at a car costing $30,000, but the dealer can sell it for less at $27,000 (although this information will not be shared with you). If your trade-in is worth $3000, then the dealer will offer the car for $30,000 minus the trade-in $3000 for a total of $27,000.
If you had not brought up your trade-in, you could negotiate the price down to $27,000 and then when everything has been finalized, tell the salesman about the trade-in. This way you will get the car you want for $24,000.
9. Don’t Get Any Add-ons
Buying a new car is already quite the investment. You will be paying off the car for the next couple of years, and it does not help that you increase the price by adding accessories. Keep the add-ons to the bare minimum. If you can do without an add-on, let it go.
10. Don’t Get the Extended Warranty
The extended warranties offered by dealerships are quite expensive. What is worse is that the extended warranty will not cover much.
If you are paying so much to buy a new car, it should come with a manufacturer’s warranty. This warranty provides more than enough coverage for your car. Avoid getting an extended warranty if it is a part of your car loan, as the total cost of the warranty with interest will be too steep. You will be better off depositing that money in a savings account to be withdrawn later for vehicle maintenance and repairs.
Buying a new car is a major purchase, so it is vital for you to do your homework about every aspect of the purchasing process. By educating yourself, you will be able to negotiate well to get the best deal possible on a new car.